e commerce

Slide 1: CHAPTER 4
Slide 2: Electronic Commerce { E-Commerce }
Slide 3: Electronic Commerce We define E-Commerce as the use of computer to facilitate all of the firm’s operations. Many of the operations are internal – they are performed within the firm by the business areas of Finance, Human resources, Information resources, Manufacturing and Marketing. Other operations involve the firm’s interface with all the environmental elements. The environmental elements are :- Customers Suppliers Stockholders & owners. Labor unions Government Financial institutions Global community Competitors
Slide 4: Anticipated benefits & constraints of e-commerce Anticipated benefits from e-commerce :- Improved customer service. Improved relationships with suppliers and financial community. Increased returns on stockholders and owner investments. Constraints of e-commerce :- High costs Security concerns Maintenance of privacy.
Slide 5: Business Intelligence The first and foremost requirement for a successful business is business intelligence. Basic Intelligence tasks :- Collect Data :- There are two classifications of data that a firm should acquire – Primary data & Secondary data. Primary data is gathered by the firm and sponsored entirely by the firm. There are representatives of the firm who gather the primary data, ex. customer surveys. Secondary data is gathered by some one who is not directly connected to the firm. These sources may charge some amount to share the information, example, commercial databases. Evaluate Data :- All the categories of data are evaluated for accuracy and authenticity. Analyze Data :- The data is to analyzed for completeness. The method commonly known as lateral thinking is applied during analysis of data, where the data is examined from various angles. Store Intelligence :- The information and data should be stored in a magnetic medium and should be kept in machine(computer) readable form for easy management. Disseminate Intelligence :- An approach for dissemination is to prepare intelligence profiles for each type of user. The intelligence information are stored under certain codes such that by mentioning the codes the required information can be searched and made available for the user. This is also called Selective Dissemination of Information ( SDI ).
Slide 6: Business Intelligence Model Collect Data Analyze Data Disseminate Intelligence Store Intelligence Evaluate Data Data Intelligence Data Intelligence Fig 4.1
Slide 7: E-Commerce Strategy The strategies are :- The elements are linked with transmission of electronics data. The name given to this is Inter-organizational System (IOS). EDI ( Electronic Data Interchange ) is the means for achieving IOS. Extranets allows the sharing of sensitive computer-based information with other firms implementing the information technology commonly associated with internet. Security and privacy are serious concerns. Firewalls are used to secure the the systems in extranets. It’s a software that only allows authorized access. Extranets have same processes as EDI but in addition implement standard protocols to use the communication network.
Slide 8: Inter-Organizational System (IOS) An IOS also known as Inter-Organizational Information System, is a combination of firms that are linked so that they can function as a single system. They work together to achieve common objectives. The firms that form the IOS are called Trading Partners or Business Partners. The organization that is the driving force behind the IOS is called as IOS sponsor. The other connected organizations are called IOS participants.
Slide 9: Comparative Efficiency :- By joining an IOS, the trading partners can provide their goods and services at lower costs than their competitors. The comparative efficiency consist of two groups – Internal efficiency & Inter-organizational efficiency. a) Internal efficiency consists of improvement in the firm’s operations, thus enabling the firm to gather data faster, analyze it faster and make decisions faster. b) Inter-organizational efficiency includes improvements that are gained by working with other firms. IOS benefits
Slide 10: IOS benefits contd.. Bargaining Power :- It’s the power or the ability to resolve disagreements with the firm’s suppliers or customers to its own advantage. This ability is achieved from three popular methods. a) Unique product features :- The electronic linkages of the IOS enable firms to offer services to their customers in the form of easier ordering, quicker shipment and faster response time to request for information. These enhancements creates a favorable market value or position in comparison to the similar products in the market. b) Reduced search - related costs :- By belonging to an IOS, a firm can reduce the shopping costs that its customers incur in searching for suppliers, identifying alternative products and getting the lowest prices. Same is seen for the firm who is like a customer for the suppliers in an IOS. c) Increased switching costs :- This is achieved by making it costly for a customer to switch to another competitor. IOS achieves this benefit by providing its customers with information resources like hardware, software and data-communication channels that would have to be changed or replaced almost entirely if they switch to another competitor outside the IOS.
Slide 11: Electronic Data Exchange (EDI) Electronic Data Interchange (EDI) consists of direct computer-to-computer transmissions of data in a machine-readable, structured format. Features of EDI :- Typical EDI linkages :- The typical EDI linkages establish connections between the firm & its suppliers and customers. Connections with the suppliers are referred as Supply side of the system, and connections with the customers are known as Customer side of the system. A Transaction set is particular type of document which would contain data fields for the customer name, address, product name and similar details. The product number in the document will be compared later to match with the product number in the inventory file. Vendor Stock Replenishment (VSR) :- VSR is the method of monitoring the process of replenishment of stocks. Here its done electronically. This requires the access to the Firm’s database which is updated dynamically. When the on-hand balance for an item reaches the reorder point, the supplier automatically generates the purchase order and fills the order, here the firm needs to grant database access to the supplier. Electronic Funds Transfer (EFT) :- The facility of electronic payment is possible, so the data representing money is transmitted over a computer network is called as EFT.
Slide 12: EDI features contd.. 3) EDI standards :- The electronic data that flows along the firm and its trading partners adhere to a standard format. The international standards are named EDIFACT. The standard format enables the trading partners to exchange data but require a translation process prior to sending and after receipts. A mapping software is used for the translation process. 4) Degree of EDI implementation :- EDI is implemented in three levels. a) Level-one users :- In this level only one or two transaction sets are transmitted to a limited number of trading partners. b) Level-two users :- In this level many transaction sets are transmitted to a large number of trading partners. Many organizational units within the firm participate in the transmission. c) Level-three users :- Here its like the level two in addition the firm’s computer applications are tailored to EDI approach. The objective of levels one & two is to convert paper documents to electronic documents, it effects only the data communications and not the applications. Hence to get greater benefits the applications are tailored to fit the EDI in the third level.
Slide 13: An EDI approach model Suppliers The firm Request for a price Price quote Invoice P.O. receipt acknowledgement Purchase Order (PO) Fig 4.2
Slide 14: EDI Benefits There are Direct benefits and Indirect benefits of EDI approach. Direct Benefits Reduced errors :- As the data coming from the network is accepted directly by the computer systems hence the errors related to manual entry are reduced greatly. A study by the EDI Group Ltd. has proved that the error rate is reduced to 4.4% ( with out EDI its 10.1%). Reduced costs :- Cost reductions are realized by eliminating the redundant steps, eliminating paper documents and eliminating manual labor for routing the documents. Increased Operational efficiency :- As the paper documents are replaced by electronic information hence the error rates have declined and routing is perfect and in time, causing the response and processing faster, with less errors.
Slide 15: EDI benefits contd.. Indirect Benefits Increased ability to compete :- The combination of reduced costs and unique products made possible by the IOS, makes it extremely difficult for the competitors to compete. Improved relationships with the trading partners :- By entering in to a formal system with the trading partners, good relations come about automatically as a by product of business activity. All the participants realize that they have the same goal. Improved customer service :- The high speeds of electronic communications enable the firm to respond quickly to the customer orders and request for services. When combined with reduced errors and ease for the customers to shop for the products results in the improvement of customer service & relations.
Slide 16: E-Commerce Technology Choices The EDI systems when implemented using electronic & computer networks become the implementation of E-Commerce technology. Following are some choices for technology to implement E-Commerce. Direct Connectivity :- The firm can establish data communications links with its trading partners using the network services provided by common carriers like AT&T, VSNL etc. The circuits take the form of dial-up or private lines and can use a variety of circuitry such as fiber-optics and microwave transmission. Value-added Networks :- A Value Added Network (VAN) is provided by a vendor who not only furnishes the circuits but also provides many services to use the circuits for EDI. For example, it can provide mapping software, maintain logs & archive files and assist in trading partner training. A prominent service provided is the security of data and information. The Internet :- The internet makes it available a good global communication network that not only links to the trading partners but can also include customers.
Slide 17: Assignment #4 What is business Intelligence ?. Explain various business intelligence tasks with diagram. Explain Inter-organizational system (IOS) and its benefits. Explain Electronic Data Interchange (EDI) with its features. Explain various degree of implementation for EDI. Mention & explain various benefits of EDI. Mention & explain the various technological choices for E-commerce. State and explain various business applications if Internet. Give a case study of any firm explaining how the E-Commerce technology helped in increasing profits.